Bone morphogenetic proteins (BMPs) are effective for bone regeneration, and are used clinically. However, supraphysiological doses are required, which limits their use. Cartilage oligomeric matrix protein is an extracellular matrix protein, which we have previously shown can bind to growth factors of the TGFs family, suggesting that COMP may also bind to BMP-2. Rather than being a passive component of the matrix, COMP may serve as an "instructive matrix" component capable of increasing local growth factor concentration, slowing the diffusion of growth factors, and promoting their biological activity. The purpose of this investigation was to determine whether COMP binds to BMP-2, and whether it promotes the biological activity of BMP-2 with respect to osteogenesis. We found that COMP binds BMP-2, and characterized the biochemical nature of the binding interaction. COMP binding enhanced BMP-2-induced intracellular signaling through Smad proteins, increased the levels of BMP receptors, and up-regulated the luciferase activity from a BMP-2-responsive reporter construct. COMP binding enhanced BMP-2-dependent osteogenesis in vitro, in the C2C12 cell line and in primary human bone mesenchymal stem cells, as measured by alkaline phosphatase activity, matrix mineralization, and gene expression. Finally, we found that COMP enhanced BMP-2-dependent ectopic bone formation in a rat model assessed histologically, by alkaline phosphatase activity, gene expression, and micro-CT. In summary, this study demonstrates that COMP enhances the osteogenic activity of BMP-2, both in-vitro and in-vivo.